Merck HIV Drug Strategy Seen Shielding Patent: Corporate India

Merck & Co. is set to sell an HIV medication in India by mid-year in partnership with local company Cipla Ltd., a strategy that may help the U.S. drugmaker protect its patent as the Asian nation seeks cheaper generics.

The price of the co-marketed product will be announced in about three months, according to Cipla’s Chief Medical Officer Jaideep Gogtay. The therapy, sold under the brand Isentress, is among more than 20 that an Indian government panel was preparing to assess for compulsory licenses, which allow cheaper local copies without the patent owner’s consent.

“There’s always a cost element to any lifelong treatments, but there’s also the need for the right patients to get it at the right time,” Gogtay said in a telephone interview from Mumbai. Cipla, the third-biggest supplier of drugs in India by market share, offers Merck extensive distribution, he said.

Emerging markets have become increasingly challenging for global drugmakers as nations from India to China seek wider access to treatments, prompting companies to explore ways of lowering prices. Merck’s deal with Cipla will involve selling Isentress at a more affordable level, according to IIFL Institutional Equities. The cost in India needs to be no more than a 10th of the $5,000 a year paid per patient in richer countries, Doctors Without Borders said.

Patent Rights

“We’ll see more deals like this,” said Bino Pathiparampil, an analyst at IIFL Institutional Equities in Mumbai. “For multinational companies, it provides some additional marketing lever -- you can reach more interior areas of the country with a lower-priced brand. It’s also one way of protecting your patent rights.”

Merck is “open to innovative approaches to access our products,” the Whitehouse Station, New Jersey-based company said in an e-mailed reply about the co-marketing agreement for raltegravir. Merck and Cipla “both share the same commitment of providing broader access to HIV treatment in India,” Merck said.

The drug is part of third-line HIV therapy for patients who aren’t responding to other treatments. Doctors Without Borders, a humanitarian organization, said it pays a discounted $1,000 to get the therapy for Indian patients.

Cipla made its name reducing the price of life-saving antiretrovirals in developing economies. In 2001, it started selling a three-drug HIV combination that would have cost about $10,400 per patient yearly in the U.S. for $350. India at the time didn’t recognize pharmaceutical patents.

Wider Access

Merck’s worldwide sales of raltegravir grew about 8.5 percent to $1.6 billion in 2013, according to data compiled by Bloomberg. India had an estimated 2.1 million people living with HIV in 2012, or about 6 percent of the global total. Only 51 percent were receiving antiretroviral therapy, according to a report from UNAIDS.

Merck joins Basel-based Roche Holding AG in making moves that may widen access to its drugs in India. Roche last year said it wouldn’t pursue Indian patents on blockbuster cancer drug Herceptin, enabling a generic copy to come to market.

“Cipla has a really good distribution network for HIV medicines,” said Leena Menghaney, a patient advocate at Doctors Without Borders in New Delhi. As for Merck, “it takes their biggest fear away, that somebody will challenge their patent or go for a compulsory license,” she said.

Cipla, down about 3 percent this year, rose 1.2 percent to 387.25 rupees at the close in Mumbai, while the S&P BSE Sensex index dropped 0.4 percent. Rising costs have hampered the company’s share price performance in 2014, said Hitesh Mahida, an analyst at K.R. Choksey Shares and Securities Pvt. in Mumbai.

Compulsory License

Gogtay said raltegravir will be imported into Asia’s third-largest economy. Merck’s rights to the medication last until April 2024. The South Asian nation began recognizing drugs patents in 2005.

The panel studying the list of more than 20 treatments planned to recommend the government assign about three so-called compulsory licenses to allow local companies to make cheaper copies, two people with knowledge of the matter said in January. They asked not to be identified as the talks are private.

Among the therapies the committee is preparing to study or had an early look at are two diabetes drugs, Merck’s sitagliptin medication, Januvia, and Bristol-Myers Squibb Co.’s saxagliptin drug called Onglyza; Bristol-Myers’ arthritis drug abatacept, sold as Orencia; and raltegravir, according to the people.

Compulsory licensing occurs when a government allows someone else to produce a patented product without the consent of the patent owner, who still owns the rights and receives payment for its use, the World Trade Organization has said.

Cheap Enough?

The price of raltegravir will have to be at least 50 percent cheaper than the current $1,000 a patient annually to be affordable in India, said Homa Mansoor, a doctor at Doctors Without Borders in New Delhi.

Taking steps to make a drug more widely available doesn’t eliminate the threat that India may impose a compulsory license anyway.

In 2008, Leverkusen, Germany-based Bayer AG began selling patented cancer medicine Nexavar in India and said it put a program in place to ensure patients have access to the treatment. Even so, India in 2012 allowed Natco Pharma Ltd. to make a low-priced copy of the medication under a compulsory license, the only one in the nation so far.

Merck has granted so-called voluntary licenses to two Indian generic manufacturers, Emcure Pharmaceuticals Ltd. and Matrix Laboratories Ltd., a unit of Mylan Inc., to manufacture and sell a low-cost version of raltegravir in 60 low-income and sub-Saharan African countries.

AIDS Epidemic

“For sub-Saharan Africa, we understand that there are short-term benefits attached to these voluntary licenses or marketing arrangements,” said Menghaney of Doctors Without Borders. “But we also understand that this will not address the AIDS epidemic across developing countries.”

Cipla has previously challenged Indian patent applications by Gilead Sciences Inc. for HIV therapy Viread, and by Tibotec Pharmaceuticals Ltd. for HIV treatment Prezista. India eventually rejected both patents.

“We’ve always stood for access to medicines,” Gogtay said. “In the future, if there are any issues on access, and Cipla has to take certain steps towards it, we will.”